Tetuan Woon Wee Yuen & Partners v Teguh Asiamas Sdn. Bhd. (J-01(IM)(NCvC)-44-01/2025)

Jemain Bin Mohamed

Pentadbir Tanah Johor Bahru

Pengarah Tanah dan Galian Negeri Johor

Tetuan Woon Wee Yuen & Partners (dituntut sebagai sebuah firma …Defendan-Defendan yang diputuskan oleh Hakim Yang Arif Puan Nurulhuda Nur'aini Binti Mohamad Nor pada 3 Januari 2025] 10/09/2025 14:22:33 J-01(IM)(NCvC)-44-01/2025 Kand. 67 S/N leIhPQhuQkSMwU085//yqw CORAM: LEE SWEE SENG, JCА CHOO KAH SING, JCA AHMAD FAIRUZ BIN ZAINOL ABIDIN, JCA GROUNDS OF DECISION (Enclosure 3: For dismissal of motion for interim stay) INTRODUCTION [1] This is an application by the Appellant for an interim stay of execution of both the High Court judgment dated 3 October 2024 and the conditional stay order dated 3 January 2025, pending the disposal of the appeal against the said conditional stay order. [2] After hearing submissions from both parties and careful consideration of the authorities cited, this Court unanimously dismisses the application for the reasons set forth herein. BACKGROUND [3] The underlying dispute arose from a fraudulent land transaction where the Respondent purchased land through a Sale and Purchase Agreement, only to subsequently lose the land due to fraud perpetrated by the vendors and their solicitors. The Appellant, as the Respondent's solicitors in the transaction, was found liable for professional negligence. S/N leIhPQhuQkSMwU085//yqw [4] The High Court, after a full trial, entered judgment in favor of the Respondent for approximately RM15 million. The Appellant filed an appeal and subsequently applied for a stay of execution. [5] On 3 January 2025, the High Court granted a conditional stay order requiring the Appellant to remit 50% of the total judgment sum to be held equally by the solicitors of both parties as stakeholders by 2 February 2025. [6] The Appellant failed to comply with this condition by the stipulated deadline and instead filed the present appeal against the conditional stay order, seeking an interim stay pending disposal of that appeal. THE APPELLANT'S CONTENTIONS [7] The Appellant advanced several grounds in support of the interim stay application, primarily centered on the financial incapacity of the Respondent to restore the judgment sum if the appeal succeeds. [8] The Appellant argued that the Respondent lacks financial capacity to restore the judgment sum if the appeal succeeds, citing the company's negative equity position, accumulated losses of RM1.2 million, and current liabilities exceeding RM17 million against assets of RM16.7 million. The Appellant submitted that this financial weakness renders any successful appeal nugatory as the funds could not be recovered. S/N leIhPQhuQkSMwU085//yqw [9] The Appellant further contended that there is a real risk of dissipation of the judgment sum, particularly given that the Respondent's sole director and majority shareholders are Chinese nationals and China lacks reciprocal enforcement agreements with Malaysia. The Appellant emphasized that the company was established solely to hold the land and has no substantial operations, increasing the risk that funds would be transferred beyond the reach of Malaysian courts. [10] The Appellant submitted that various factors constitute special circumstances warranting an interim stay, including conflicting High Court judgments requiring resolution by the Court of Appeal, complex legal and factual issues affecting conveyancing practice in Malaysia, risk of irreparable damage to the Appellant's professional reputation, and potential misuse of professional indemnity insurance and compensation funds. [11] The Appellant argued that without an interim stay, both the primary appeal and the appeal against the conditional stay order would be rendered nugatory if successful, as the Respondent could not restore the funds once received and potentially dissipated. THE RESPONDENT'S POSITION [12] The Respondent contended that pursuant to Order 45 Rule 10 of the Rules of Court 2012, the Appellant's failure to comply with the conditional stay order by the stipulated deadline resulted in the order lapsing, and the Appellant is deemed to have abandoned its benefit. The Respondent S/N leIhPQhuQkSMwU085//yqw argued that this failure to comply disentitles the Appellant from seeking further relief. [13] The Respondent argued that none of the factors raised by the Appellant constitute special circumstances sufficient to warrant an interim stay, particularly where a conditional stay mechanism already provides adequate protection. The Respondent emphasized that the concerns about dissipation and financial incapacity become irrelevant when funds are held by solicitors as stakeholders rather than paid directly to the judgment creditor. [14] The Respondent submitted that the application constitutes an abuse of process, as the Appellant obtained the conditional stay order in its favor but then failed to comply with its terms while simultaneously appealing against it. This conduct, the Respondent argued, demonstrates bad faith and an attempt to avoid the consequences of court orders. [15] The Respondent highlighted that the Appellant is covered by mandatory professional indemnity insurance under the Legal Profession Act 1976, negating claims of potential financial hardship or reputational damage. The Respondent argued that this insurance coverage eliminates any genuine concern about the Appellant's ability to satisfy the judgment. PRINCIPLES GOVERNING STAY APPLICATIONS [16] The fundamental principle governing stay applications is well-established. As stated in Kosma Palm Oil Mill Sdn Bhd & Ors v S/N leIhPQhuQkSMwU085//yqw Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257, the general rule is that an appeal shall not operate as a stay of execution unless the court so orders, and a successful party should not be deprived of the fruits of litigation unless special circumstances are shown. [17] Special circumstances must be "exceptional in character, something that exceeds or excels in some way that which is usual or common." The test requires something more than ordinary reasons and must demonstrate strong justification beyond normal circumstances. The Federal Court in Kosma Palm Oil emphasized that there are myriad circumstances that could constitute special circumstances, but each case must be determined on its own facts. [18] As recognized in China Harbour Engineering Company Ltd v Lunar Shipping Agencies Sdn Bhd [2016] 1 LNS 1393, courts possess discretionary power to grant conditional stays to balance competing rights and interests of parties while ensuring judgment creditors are not unduly deprived of litigation fruits. The court noted that conditional stays serve to provide "assurance" to successful litigants while protecting legitimate appeal rights. ANALYSIS AND DECISION [19] Order 45 Rule 10 of the Rules of Court 2012 provides that a party who fails to fulfill conditions in a judgment or order is deemed to have abandoned the benefit thereof. The authorities in Talbot v Blindell [1908] 2 KB 114 and M.C. Perera & Ors v N. Ponnusamy & Ors [1974] 1 MLJ S/N leIhPQhuQkSMwU085//yqw 181 confirm that non-compliance with conditional orders results in their abandonment. [20] The critical factor in our decision is that the conditional stay order already provides adequate protection against the primary concern raised by the Appellant, namely that appeals would be rendered nugatory if successful. This protection operates through the stakeholder mechanism whereby the judgment sum would be held by solicitors of both parties as stakeholders, preventing direct access by the Respondent and ensuring funds remain available for return to the Appellant if the appeals succeed. [21] Under the conditional stay mechanism, funds would not be accessible to the Respondent pending appeal disposal, and if appeals succeed, the Appellant can recover the funds from the stakeholders. Crucially, the risk of dissipation to foreign jurisdictions is eliminated entirely, as the funds remain under the control of officers of the Malaysian courts throughout the appellate process. [22] This mechanism directly addresses the nugatory appeal concern that typically justifies stay applications. The fear that successful appeals would be meaningless does not arise when funds are held in stakeholder accounts subject to court orders and professional obligations of the legal practitioners involved. S/N leIhPQhuQkSMwU085//yqw [23] While the Appellant raised various factors, none constitute the exceptional circumstances required for an interim stay when properly analyzed in light of the conditional stay protection already available. [24] The Respondent's financial difficulties, while relevant to unconditional stay applications, are rendered immaterial when funds are held by independent stakeholders rather than paid directly to the Respondent. The financial position of a judgment creditor becomes irrelevant when that creditor has no access to the judgment funds pending appeal. [25] The Chinese nationality of directors and shareholders becomes irrelevant when the conditional stay mechanism prevents direct access to judgment funds. The concerns about enforcement in foreign jurisdictions simply do not arise where funds remain within the Malaysian legal system under the control of Malaysian legal practitioners. [26] The Appellant's concerns about reputational damage and professional consequences are mitigated by professional indemnity insurance coverage and the availability of the stakeholder mechanism. The Appellant cannot claim irreparable harm when insurance exists specifically to address such contingencies and when compliance with court orders would provide the protection sought. [27] Recent decisions on unconditional stays, while relevant to the underlying stay application, do not override the court's discretion to impose reasonable conditions that achieve the same protective effect. S/N leIhPQhuQkSMwU085//yqw [28] The Appellant relies heavily on the Federal Court Federal Court Decision dated 02/11/2022 in Civil Appeal No.: 02(f)-4-01/2022 (W) Renew Capital Sdn Bhd & Ors v ADM Ventures (M) Sdn Bhd. [29] In that case, the Federal Court was posed with the following question: "Whether the Applicant in applying for a stay of execution has successfully shown that the Respondents do not have the capacity to pay the judicial amount should be granted an unconditional stay of execution, having considered the Federal Court's judgment in the case of Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd (200314 CLJ 1." [30] The Federal Court answered in the affirmative. However, no written grounds were issued. [31] It is our view that the principle that financial incapacity of judgment creditors may justify unconditional stays does not extend to requiring courts to grant interim stays that address the same concerns. [32] The balance of convenience strongly favors the Respondent. The Respondent has waited over 5 years for resolution of its claim and has expended substantial time and costs in litigation. The Respondent lost its property investment due to the fraudulent transaction for which the Appellant, as professional adviser, bears responsibility. Professional S/N leIhPQhuQkSMwU085//yqw indemnity insurance provides adequate protection for the Appellant against the consequences of adverse judgments. [33] Conversely, the Appellant faces no prejudice from the conditional stay mechanism, as compliance would provide the same protection as an unconditional stay while ensuring the Respondent receives appropriate assurance. The Appellant's refusal to comply with reasonable conditions suggests an attempt to avoid the consequences of legal liability rather than a genuine concern about protecting appeal rights. [34] Permitting interim stays of conditional stay orders would undermine the careful balance courts seek to achieve between protecting appellants' rights and preserving judgment creditors' legitimate expectations. Such a practice would effectively allow parties to obtain unconditional stays by the indirect route of challenging conditional orders while refusing to comply with their terms. [35] Conditional stays serve important functions in the judicial system. They prevent abuse by judgment debtors who might otherwise indefinitely delay satisfaction of judgments through repeated applications. They provide "assurance" to successful litigants while protecting legitimate appeal rights. They reduce the burden on appellate courts by obviating the need for additional stay applications when reasonable protective measures are implemented. S/N leIhPQhuQkSMwU085//yqw [36] If parties could routinely obtain interim stays of conditional orders by citing the same factors that justified the original stay application, the conditional stay mechanism would lose its effectiveness and courts would face endless cycles of stay applications. This would frustrate the orderly administration of justice and undermine the finality that judgments are intended to provide. CONCLUSION [37] This Court finds no merit in the application for an interim stay. The conditional stay order already addresses the core concern that appeals might be rendered nugatory, while preserving the Respondent's legitimate expectations as a successful litigant. The protective mechanism inherent in the stakeholder arrangement eliminates the primary justification typically advanced for stay applications. [38] In the exercise of our discretion, we are not satisfied that special circumstances exist to justify interfering with the High Court's balanced conditional stay order. The concerns raised by the Appellant, while understandable, are adequately addressed by the conditional stay mechanism and do not rise to the level of exceptional circumstances required for the relief sought. [39] However, recognizing the substantial amounts involved and the complexity of the professional indemnity arrangements that may require coordination between multiple insurance providers, we exercise our S/N leIhPQhuQkSMwU085//yqw discretion to allow a final 60-day period from today for compliance with the High Court's conditional stay order. [40] Costs of RM10,000 are awarded to the Respondent, reflecting the unsuccessful nature of the application, the substantial legal resources required to respond to the comprehensive submissions filed, the need to discourage frivolous or repetitive stay applications that burden the court system, and the fundamental principle that costs should follow the event. [41] For the foregoing reasons, this Court orders that the application for interim stay is dismissed, the Appellant is allowed 60 days from today to comply with the conditions imposed in the High Court's conditional stay order dated 3 January 2025, and costs of RM10,000 are awarded to the Respondent subject to allocatur. Date: 29.8.2025 Ahmad Fairuz Zainol Abidin Judge Court of Appeal Malaysia Putrajaya S/N leIhPQhuQkSMwU085//yqw For the Appellant – 1.Johanan A. Puthucheary 2.Lim Stew Ling (Nadzarin Kuok Puthucheary & Tan) Suite 8.3, Level 8, Menara Pelangi 2, Jalan Kuning, Taman Pelangi 80400 Johor Bahru Malaysia For the Respondent- 1. Lau Kee Sern 2.Vynny Wong Poh Yee (Kee Sern, Siu & Huey) No. 468-11(E)(2), 2nd Floor, Block C, Rivercity, Jalan Sultan Azlan Shah (formerly Jalan Ipoh), 51200 Kuala Lumpur, Federal Territory of Kuala Lumpur S/N leIhPQhuQkSMwU085//yqw